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AnnualReport

2011

LaporanTahunan

Annual Report 2011

Our Vision and Mission

VISIONTo be the leading banking and financial group in Brunei Darussalam.

MISSIONAs a truly local entity in Brunei Darussalam, the Group is committed to provide innovative and comprehensive financial products and services to the Bruneian community.

Annual Report Baiduri Bank 2011 41

Contents

Chairperson’s Statement

Corporate Information

2011 Financial Highlights

2011 Corporate Highlights

∙ Corporate Banking

∙ Retail Banking

∙ Consumer Financing-Baiduri Finance

∙ Operations Management

∙ Human Resource Development

∙ Supporting Brunei’s International Initiatives

∙ Grooming Locals in Business

∙ Corporate Social Responsibility

∙ International Awards

Financial Statements 2011

∙ Report of the Directors

∙ Independent Auditor’s Report

∙ Profit and Loss Statements

∙ Balance Sheets

∙ Statements of Changes in Equity

∙ Cash Flow Statements

∙ Other Financial Information

Offices, Branches and ATM Network

42

44

47

49

59

76

42 Annual Report Baiduri Bank 2011


On behalf of the Board of Directors, I am pleased to present the Annual Report and Accounts of Baiduri Bank Berhad for the financial year ended 31st December 2011.

BANKING ENVIRONMENT

2011 was a challenging year where all banks operated in a difficult, more restrictive operating environment. New regulations issued by the regulatory authority tightened policies for personal loans and credit cards business had the effect of slowing down the domestic retail sector. This in turn, affected the banking industry, shown by the drop in GDP for this sector.

In spite of these challenges, Baiduri Bank Group was still able to achieve good operating results, primarily owing to a well-balanced set of core businesses: retail banking, corporate banking and consumer finance under Baiduri Finance.

FINANCIAL RESULTS

The Group’s total assets increased 30% to reach BND3.5 billion in 2011. Profit after Tax for Baiduri Bank was BND 30 million.

Baiduri Bank’s equity increased from BND173 million in 2010 to BND 193 million in 2011. Its Capital Adequacy Ratio of 15% was well above the minimum 10% set by the authorities. With our

loan-to-deposit ratio of around 32%, we were ready to finance more businesses and projects.

Total Operating Income for Baiduri Finance was BND49 million. Changes in accounting policy, imposed on all finance companies by Autoriti Monetari Brunei Darussalam, brought about an extraordinary one-time financial charge on the treatment of dealers’ commission which resulted in a loss of BND2 million for the company at the end of 2011. The profit before this financial charge had been BND17 million. This situation is expected to correct itself by end 2012.

BUSINESS HIGHLIGHTS

Retail BankingIn our spirit of innovation, we developed new products, enhanced services and greater investments in 2011 to improve process-capabilities in our branches. Eight new products and services were launched under the Retail Banking Division. These included: the Union Pay Debit Card; the Premium Payroll Package; and six high-yield certificates of deposits. The public response to these was most encouraging. As part of our service-improvement initiatives, we also presented the new Branch Service Standards at selected branches. All branches will be covered by the end of 2012.

Corporate BankingUnder our Corporate Banking Division, we developed new products for project and contract financing with special focus on both oil and gas and diversification projects. We continued to promote banking and value-added convenience to corporate customers. These include business i-banking, payroll management, card merchant services and internet payment gateway.

Baiduri Finance Our 100% owned subsidiary, Baiduri Finance continues to be the market leader in vehicle financing. Total hire purchase loans increased from BND695 million in 2010 to BND 723 million in 2011.

OPERATION HIGHLIGHTS

Business Continuity PlanIn 2011, Baiduri Bank Group began a group wide project to establish a Business Continuity Plan (BCP) as part of Baiduri Bank Group’s risk management programme. The purpose is to provide and implement explicit guidelines and procedures to minimize interruption to operations during a crisis. This involved the establishment of the Business Continuity Management function (in accordance to British Standards BS 25999). The project is expected to be completed in the first half of 2012 and the BCM function will continue to evolve and develop over time.

Upgrading Facilities Several new premises were upgraded in 2011 as part of our on-going facilities-upgrading project. At the end of the year, our E-Banking Centre moved to a new and bigger premise in Kiarong to provide an even higher level of customer service to support the rapidly increasing number of electronic-banking users. This new centre also functions as a resource centre for



the general public to learn more about Baiduri Bank’s array of electronic channels. Refurbishment of the external façade of the head office in Kiarong began in late 2011 in line with Baiduri Bank Group’s new corporate branding of a modern and friendly corporation.

Technological DevelopmentIn 2011, major upgrading were carried out in the electronic channels; ATM provided more services to customers; the Internet Payment Gateway (IPG) was enhanced and upgraded to an enterprise platform providing even more stability and features; and the Bank’s Internet Banking solutions were upgraded to provide new services. Baiduri Bank Group will continue to make use of technological advances to bring its clients the most innovative products and services.

HUMAN RESOURCES

At the end of 2011, Baiduri Bank Group employed 478 members of staff. Staff development programmes were intensified. They focused on Financial Planning courses. Baiduri Bank now has 40 employees holding financial planning qualifications. Regular training and seminars were organized in order to improve service quality and operating processes. Cardiopulmonary resuscitation, fire prevention and language courses were added to strengthen staff’s overall personal development.

CORPORATE SOCIAL RESPONSIBILITY

Local Charities Baiduri Bank Group continues to support local charities, especially child development. The “Baiduri Masters”, a Baiduri Bank Group’s annual golf event organized to raise funds for charity, is still the biggest golfing event in Brunei. In 2011, BND60,000 was raised and donated to five charity and welfare organizations: Pusat Ehsan Al-Ameerah Al-Hajah Maryam, SMARTER, Learning Ladders Society, RIPAS Hospital Paediatric Haemoto-Oncology Centre and RIPAS Child Development Centre.

Community Development In support of community development, Baiduri Bank continues to sponsor the World Blood Donor Day and Universal Children’s Day annually.

AWARDS

In 2011, Baiduri Bank won three prestigious international awards. World Finance magazine awarded Baiduri Bank with the “Company of the Decade 2001 to 2010 for Brunei” and the “Best Banking Group Brunei 2011”. The Bank also received the “Bank of the Year 2011” from The Banker magazine for the eighth time since 2002.

OUR PLANS FOR 2012

As a leading bank with strong commitment to the Brunei market, Baiduri Bank will continue to play an active role in the economic growth of the country and its national development programmes in order to meet the goals and objectives of Brunei’s Wawasan 2035.

In accordance with our global strategy for growth, our products and services, branch network and electronic channels will continue to evolve to meet the needs of our customers.

APPRECIATION

On behalf of the Board of Directors, I would like to express our appreciation to the Government of His Majesty the Sultan and Yang Di-Pertuan for their support.

I also wish to thank our shareholders and our clients for their continued support and confidence.

In conclusion, I wish to record Baiduri Bank’s appreciation to the management and staff for their hard work and much-valued contribution to a successful year.

YTM Pengiran Anak Isteri Pengiran Anak Hajah Zariah

Chairperson



SHAREHOLDERS

Baiduri Holdings BhdRoyal Brunei Airlines Sdn BhdRoyal Brunei Technical Services Sdn BhdBNP Paribas

BOARD OF DIRECTORS

YTM Pg Anak Isteri Pg Anak Hajah Zariah BintiAlmarhum Pg Pemancha Pg Anak Haji Mohamed Alam

(Chairperson)

Francis Gerard Caze Haji Abu Bakar Bin Haji Ibrahim

Bertie Cheng Shao Shiong

YAM Pengiran Muda Abdul Fattaah

Dato Paduka Haji Mustappa Bin Hj Sirat

Dato Paduka Timothy Ong Teck Mong



Pierre Imhof Chief Executive Officer

Ti Eng Hui Deputy General Manager, Retail Banking and Branch Network

Andrew Young Chee Ann Deputy General Manager, Operations Management Division

Hj Haliluddin Bin Dato Hj Talib General Manager, Baiduri Finance

Yvonne Chan Eng Pheng Senior Manager, Corporate Banking

Pg Azaleen Bin Pg Dato Hj Mustapha Senior Manager, Treasury

Veronica Chong Nyet Hwa Senior Manager, Human Resources and Finance

MANAGEMENT COMMITTEE

(Left to right) Standing:Yvonne Chan, Andrew Young, Pg Azaleen Bin Pg Dato Hj Mustapha, Pierre Imhof, Ti Eng Hui, Hj Haliluddin Bin Dato Hj Talib, Veronica Chong



AWARDS AND ACCOLADES

For the third consecutive year in 2011, Baiduri Bank Group was recognized as the Best Banking Group in Brunei 2011 by World Finance magazine, a renowned global finance magazine. Baiduri Bank also won the Bank of the Year Award 2011 for Brunei from the Banker Magazine, the eighth time since 2002. In March 2011, World Finance awarded Baiduri Bank the “Company of the Decade for Brunei” for 2001-2011, the only company in Brunei to have won this award.

AUDITORS

Deloitte and Touche

CORPORATE SECRETARIAL SERVICE PROVIDER

Deloitte & Touche Management Services Pte Ltd

Baiduri Bank’s wholly-owned subsidiary, Baiduri Finance obtained the internationally recognized ISO9001 quality certification in 2003.


2011 Financial HighlightsYear ended December 31, 2011

BANK OPERATING RESULTS

Year Ended December 31

2011 2010

(B$ in thousands, except per share information)

For the Year

Revenue (1) 104,908 112,690

Net Operating income 92,390 99,877

Return on assets 1.11% 1.77%

Return on shareholders’ equity 15.69% 19.73%

Shares issued and paid (in millions) 100,000 100,000

At Year End

Total Assets 2,721 1,931

Total Loans and advances (net) 752 821

Total deposits 2,344 1,483

Total shareholders’ equity 193 173

Contents

(1)Includes interest and Non interest income excludes interest expenses

Capital Adequacy Ratios (Bank) 2008 2009 2010 2011

Tier 1 (Core Capital) 14.28% 15.59% 17.48% 15.46%

Total Capital 11.41% 13.00% 14.96% 13.43%


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25.806

42.97339.88

17.52

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136.71

170.78

201.37208.69

B$52,459

Hire Purchase& Leasing

B$19,723Others

B$75,484

Consumer & CommercialBanking / Credit Card

Group Total Revenue (Group 2011) ($’000)

2011 Financial HighlightsDecember 31, 2011

Non- Interest Income

Net InterestIncome

Corporate Highlights 2011


Corporate Highlights

The banking environment in Brunei Darussalam continues to be competitive and challenging with more stringent policies imposed by the regulatory authorities particularly on consumer spending.

CORPORATE BANKING

2011 saw the successful completion of a number of major projects financed by Baiduri Bank, both under the Government of Brunei and Brunei Economic Development Board. With in-depth knowledge of our corporate customers and the local market, our strengths are in our flexible and fast response in assessing customer’s applications for financing.

Baiduri Bank remains an active player in the financing of many key development projects awarded by the Government of Brunei, Brunei Economic Development Board and the Brunei Shell Petroleum Company. These included the housing projects under the Ministry of Development’s National Housing Scheme, the BEDB’s housing projects and the construction of a highway project.

The domestic corporate banking market remains highly competitive, with more banks moving aggressively into this segment, triggered by the slowdown in consumer lending and credit card business following the 2010 imposition of new guidelines by the Ministry of Finance. Nevertheless, Baiduri Bank continues to develop its activities as one of the key players in corporate banking in Brunei today.

For the eighth consecutive year in 2011, Baiduri Bank continued to work hand in hand with Brunei Shell Petroleum and Asia Inc Forum on an SME partnership programme aimed at nurturing and grooming Brunei’s SME’s through business awards, networking gathering, business forums and workshops.

Under the Enterprise Facilitation Scheme and the Micro-Credit Scheme, both in collaboration with the Ministry of Industry and Primary Resources, Baiduri Bank has since 2001, been providing assistance to local entrepreneurs to give them a head start in their business.

RETAIL BANKING

In spite of stricter regulations imposed by the regulatory authorities governing personal loans and credit card business, Baiduri Bank was still able to achieve growth in the retail sector in 2011. Focus was on the development of more innovative products and enhancing our services at the branch network.

Card Services

In 2010, Baiduri became the first bank in Brunei to launch UnionPay card acceptance services. In April 2011, the Bank reached yet another milestone in card business when it became the first bank in Brunei to launch Baiduri UnionPay Debit Card, the first PIN-based international debit card in the country. With the personalized identification or PIN to be keyed in for any transaction to be approved, protection from fraud or misuse of the card is heightened, merging security and convenience in secured cashless transactions anywhere in the world. With 2011 being the Year of Friendship between Brunei and China as declared by the two governments, along with the resumption of direct flights to Shanghai from 2010 by Brunei’s national carrier RBA, Baiduri UnionPay Debit Card which is vastly accepted in China has been able

The UnionPay Debit Card launch event at the Empire Hotel and Country Club on 26th April 2011. Baiduri Bank CEO Pierre Imhof (2nd R), Ti Eng Hui, Deputy General Manager Retail Banking and Branch Network (far right) with the Guest of Honour, Dato Paduka Dr Hj Mohd Amin Liew Abdullah, the Permanent Secretary of Ministry of Industry and Primary Resources (3rd R), HE Mr Min Yongnian, Ambassador of the People’s Republic of China to Brunei (3rd L) and Mr Cai Jianbo, First Executive Vice President of China UnionPay (2nd L).



to meet the needs of both business and leisure travellers alike, resulting in increased merchant sales volume and further strengthening Baiduri Bank’s leadership position in card business in Brunei.

Baiduri Bank has long been known for its market leadership and innovation. In 2011, the Bank introduced to its card merchants, the world’s smallest all-in-one wireless payment device – the VeriFone Vx 670. The VeriFone Vx 670 features a new, faster processor and WiFi or GPRS connectivity speed that are perfect for any merchant who needs a secure, feature-rich, portable device that allows the merchants to produce receipts for customers instantaneously. Merchants can bring the wireless POS terminals to customers wherever they may be, providing extra convenience to both merchants and their customers.

Wealth Management

A dedicated Bancassurance Unit was set up in 2011 within the umbrella of Wealth Management. This unit specializes in insurance products and is aimed to enhance Baiduri’s range of wealth management products and financial solutions to the public even further.

During 2011, several new and innovative investment products were launched. These included Baiduri Certificate of Deposit Series 6, 7, 8, 9 and 10 and the Baiduri Single Certificate of Deposit for high net worth investors. These certificates of deposits have longer tenor of between 2 to 5 years, as compared to traditional fixed deposit tenor of 1 year. These new investment products were well received by the market, because of their attractive fixed pay-outs and 100% principal protection by Baiduri Bank, thus reflecting the strong confidence of the public in the Bank.

In support of the Brunei Government’s aspiration to inculcate a savings culture and awareness of financial planning within its population, and in collaboration with Tabung Amanah Pekerja (Employee Provident Fund), Wealth Management organized several talks during the year for employees of public and private sector establishments on the importance of financial planning.



CONSUMER FINANCING – BAIDURI FINANCE

Baiduri Finance, Baiduri Bank’s wholly owned subsidiary, continues to be the market leader in Vehicle Hire Purchase in the country, with total HP loans increasing from BND695 million in 2010 to BND723 million in 2011. Baiduri Finance remains the only organization within the financial services sector to be certified to ISO9001, the seal of quality management system.

In close collaboration with selected motor dealers, Baiduri Finance continued to organize a number of exclusive previews on new vehicles for their customers as part of their customer loyalty programme. In September 2011, two Baiduri Finance customers won themselves a trip to Korea to test drive the new Audi A6 sedan, as part of a special arrangement with the franchise owner in Brunei.

OPERATIONS MANAGEMENT

Business Continuity Plan

In 2011, Baiduri Bank Group developed a group wide project to establish a Business Continuity Plan (BCP) as part of Baiduri Bank Group’s risk management programme. The purpose is to provide and implement explicit guidelines and procedures to minimize interruption to operations during a crisis while at the same time, enable the Bank to continue to provide the usual level or service to its customers. This involved the establishment of the Business Continuity Management (BCM) function in accordance to British Standards BS 25999. The project is divided into several phases and is expected to be completed in the first half of 2012. The phases include: risk assessment, business impact analysis, business continuity strategies, emergency response plans, emergency operations and crisis management phases. The BCM function will continue to evolve and develop over time.

Upgrading Facilities

Several new premises were upgraded in 2011 as part of our on-going facilities-upgrading project. At the end of the year, our E-Banking Centre moved to a new and bigger premise in Kiarong to provide an even higher level of customer service to support the rapidly increasing number of electronic-banking users. This new centre also functions as a resource centre for the general public to learn more about Baiduri Bank’s array of electronic channels. Refurbishment of the external façade of the head office in Kiarong began in late 2011 in line with Baiduri Bank Group’s new corporate branding of a modern and friendly corporation.

Technological DevelopmentIn 2011, major upgrading were carried out in the electronic channels; ATM provided more services to customers; the Internet Payment Gateway (IPG) was enhanced and upgraded to an enterprise platform providing even more stability and features; and the Bank’s Internet Banking solutions were upgraded to provide new services. Baiduri Bank Group will continue to make use of technological advances to bring its clients the most innovative products and services.

A night view of Baiduri Finance Head Office at Sumbangsih Bahagia, Beribi. Baiduri Finance is 100% owned by Baiduri Bank and is the market leader in vehicle financing in Brunei.



HUMAN RESOURCE DEVELOPMENT

It has always been the Group’s vision to continually increase the skills and competencies of the whole work force through well-rounded staff development programmes. In 2011, we focussed on financial planning, customer service and process improvement courses. In addition, cardiopulmonary resuscitation, fire prevention and language courses were added to strengthen staff’s overall personal development.

Emergency Response Training

Fire Marshall training emphasizes the significance of fire safety and the consequences of fire hazards in a working environment. The training is an effort to ensure employees are equipped to handle situations of fire or other emergencies as well as ensuring the safety and livelihood of other staff members and customers. At the end of 2011, a staged fire scenario took place at the Bank’s Head Office in Kiarong. At the scene, Bank personnel who were qualified as Fire Marshalls worked hand-in-hand with professional fire fighters to contain the “fire”. The fire evacuation exercise is an integral part of Baiduri Bank’s emergency action plan. To date, a total of 42 personnel have completed the Fire Marshall Training.

Enhancing Professional Financial Planning Skills

Recognizing the need to constantly evolve to remain relevant with changing times, Baiduri Bank has set the priority to develop staff to become qualified financial planners. The aim is to equip staff with the latest knowledge and expertise in order that Baiduri Bank, as a leading Bruneian Bank, will be able to continuously meet the changing needs of customers whilst enabling staff to reach the highest level of performance at work.

In May 2011, four personnel received the prestigious Chartered Financial Consultants (ChFC) certificate at a certificate award ceremony held at the bank’s Head Office. The CHFC is the premier designation in financial consulting and is internationally recognized. This brings to a total of eleven employees holding this qualification.

Upgrading of Professional Skills

To further enhance the knowledge and expertise of the staff, additional courses were organized on risk management, banking, customer service and product knowledge during the year for all categories of staff. These include courses organized in collaboration with the newly formed Centre of Islamic Banking Financial Management (CIBFM) as well as tailor-made courses especially designed for Baiduri Bank Group.

A number of senior staff also attended external courses abroad including Singapore and Malaysia to develop in-depth knowledge on specialized areas.



GROOMING LOCALS IN BUSINESS

Local Business Development Programme with Asia Inc Forum

Baiduri Bank continued its SME partnership programme with Asia Inc Forum, aimed to continuously nurture Brunei SMEs. The key programs carried out this year included a workshop entitled “Build Your Business to the Next Level” with the theme “Appreciate your current performance and decide where you want to go” and “Understand and attract your target customers”. In the final workshop for the year 2011 in the Asia Inc Forum’s Local Business Development, Baiduri Bank’s CEO, Mr. Pierre Imhof, presented a paper on the future outlook of SMEs in Brunei which was followed by a number of presentations by different professional and veterans alike. All the workshops were attended by participants, many of whom are customers of Baiduri Bank.

BSP Coaching Scheme Initiative (CSi)

The Bank also partnered with Brunei Shell Petroleum (BSP) in the BSP Coaching Scheme Initiative (CSi), a scheme aimed to develop local SME vendors registered with BSP. In the CSi, Baiduri Bank provided facilitators and coaches for the scheme to discuss about Financing Local Businesses.

CORPORATE SOCIAL RESPONSIBILITY

Baiduri Bank has been an active and regular supporter of local charities since its inception. The Bank has a policy of donating in kind, usually in response to a specific need that has been identified. The Bank aims to raise public awareness about the needs of special people and to promote activities that would contribute towards special people gaining acceptance in the wider society.

Raising Funds through Sports

The Baiduri Masters is the main activity in which public participation is invited to help raise funds for charity. The golf tournament, which started in 1996, is the most prestigious and widely attended golf event in Brunei. A total of 904 golfers participated in the 6-day event held over two weekends from 1st to 10th July 2011 at the Royal Brunei Airlines Golf Club. At the Prize Presentation Dinner, Baiduri Bank Group donated a total of BND60,000 to six charity and welfare organizations as part of the proceeds from the event.

SUPPORTING BRUNEI’S INTERNATIONAL INITIATIVES

Official Bank for BRIDEX 2011

For the second time, Baiduri Bank became the official bank for the 3rd Brunei Darussalam International Defence Exhibition & Conference (BRIDEX) which was held in Brunei from 6th to 9th July 2011. Organized by Royal Brunei Technical Services (RBTS), BRIDEX is the premier defence and security event in South East Asia and is held once every two years. It brings together the world’s leading manufacturers and suppliers of defence and security equipment and systems and high level international government as well as defence and security officials, providing them unique experience in business facilitation. As the official bank, Baiduri provided a host of banking services in the BRIDEX exhibition centre to visitors, delegates and exhibitors, many of whom came from overseas to attend this international event.

Col (R) Pengiran Hj Kamal Bashah bin Pengiran Hj Ahmad, CEO (2nd L) signed on behalf of Royal Brunei Technical Services while Pierre Imhof, CEO, Baiduri Bank signed on behalf of the Bank, witnessed by Ti Eng Hui, Deputy General Manager, Retail Banking and Branch Network, Baiduri Bank (far right) and Hj Mohd Don bin Hj Omar, Deputy Exhibition Director of BRIDEX (far left) during the Partnership Signing Ceremony held at the BRIDEX Conference Room on 4th March 2011.

Baiduri Bank personnel, ready to serve customers at the Baiduri counter at the BRIDEX Exhibition Hall. As the official bank, Baiduri provided a host of banking services, which included foreign currency exchange and cash advance through cards.



The new RIPAS Hospital Paediatric Haemoto-Oncology Ward was one of the beneficiaries from the Baiduri Masters Charity Golf tournament 2011.

YAM Pengiran Muda Abdul Muqtadir, the son of Baiduri Bank’s Chairperson, HRH Pengiran Anak Isteri Pengiran Anak Hajah Zariah (left), presenting the challenge trophy to Carlos Miguel Eleazar Ochao (right), winner of the Baiduri Masters 2011.

Helping Less-Privileged Children achieve their Education Goals

Every year, Baiduri Bank offers education grants to deserving children from less privileged homes to assist them in meeting the cost of their school fees. In 2011, several children from throughout the country received such grants. In addition, for the fourth consecutive year, in collaboration with Western Union, Baiduri Bank has facilitated the presentation of education grants to migrant workers in Brunei. The program aims at availing funds that will help aspiring individuals and their families overcome barriers to higher education. This education grant covers as much as a year’s tuition fees and other necessities in countries such as Indonesia, India or the Philippines. Since the launching of this program, a total of 50 education grants worth $25,000 have been awarded to migrant workers in Brunei.

Japan Earthquake and Tsunami Relief Initiative

Baiduri Bank together with Western Union joined hands in extending their support to the citizens of Japan after the devastating earthquake and subsequent tsunami in March 2011. Baiduri Bank participated in Western Union’s shared value campaign and offered a “No-Fee Transfer” initiative allowing consumers to send money transfers to family and friends. Western Union with its Agents in Japan helped facilitate the delivery of services in a fast, reliable and convenient manner as it is crucial in providing emergency support to family and friends in Japan.

Donating for a Good Cause

Baiduri Bank is active in the spirit of giving to the underprivileged and helping out for a charitable cause. Baiduri Bank has participated in the Pusat Ehsan Charity Bazaar, Pusat Ehsan itself being one of the many welfare organisations that is actively supported by Baiduri Bank annually. During the Charity Bazaar, staff helped set up games booth to raise funds along with numerous personal contributions from staff members.

Pierre Imhof, Baiduri Bank’s CEO presenting a donation to Madam Cheong Poh Lian, Principal of Chung Ching Middle School to cover school fees for deserving less privileged students in the school during the Chinese New Year Dinner 2011.

A child proudly displaying the prize she won at the Baiduri Bank booth during the Pusat Ehsan Charity Bazaar where Baiduri Bank regularly participates in to help raise funds for the Centre.



Supporting Community Development

World Blood Donor Day

For the fifth year running, Baiduri Bank was a major sponsor of the Annual Blood Donor Day. The event, held on 14th June was themed “More Blood, More Life”. The Minister of Health, Pehin Orang Kaya Johan Pahlawan Dato Seri Setia Hj Adanan launched the event which was held at the International Convention Centre (ICC) in Berakas. The aim of the World Blood Donor Day is to raise awareness of the need for safe blood and blood products as well as to appreciate blood donors for their life-saving gifts.

Blood Donation Drive

On 19th October, Baiduri Bank held its annual blood donation drive. Organised by the Human Resources Department, the purpose is to help increase the stock of blood at RIPAS Blood Bank and to cultivate the spirit of caring among the Bank’s employees. The drive saw around 90 members of staff coming forward from various departments along with customers that have volunteered. Universal Children’s Day

Baiduri Bank has always been the main sponsor for the Universal Children’s Day Celebration hosted by the Ministry of Culture, Youth & Sports. In 2011, it took place on the 20th and 21st November, with a two-day forum held at Dewan Muhibbah at Jalan Airport Lama and was attended by 300 students from public and private secondary schools from the Brunei-Muara District. The forum encouraged students to put forward their view on topics such as financial planning, entrepreneurship, education and more. Ms Irene Thow, Bancassurance Manager in the Baiduri Bank Wealth Management Centre came to assume the role of facilitator in the forum.

Staff and customers of Baiduri Bank came forward to heed the call for blood donations held at Baiduri’s Training Centre during the annual Blood Donation Drive organized by the bank organized jointly with RIPAS Hospital Blood Bank.

Irene Thow, Banassurance Manager of Baiduri Bank (in green t-shirt) facilitating an activity during the Universal Children’s Day Forum 2011.

Besides participating in the Pusat Ehsan Charity Bazaar, Baiduri Bank’s staff organized separately a fun raising activity among colleagues, the proceeds of which was donated to the Centre. Picture shows Dorothy Newn, Head of Corporate Communications and Marketing (in green t-shirt) presenting the cheque to Pengiran Datin Hajah Noraini, the Executive Trustee of Pusat Ehsan Al-Ameerah Al-Hajah Maryam.

Bringing Cheer to Young Cancer Patients

In November 2011, Baiduri Bank gave the opportunity to children cancer patients from the RIPAS Paediatric Haemoto-Oncology Centre to pick toys from Toys R Us for the Centre. This activity was part of the B$15,000 pledged in July 2011 to RIPAS Hospital for the new Paediatric Haemoto-Oncology Centre. A few weeks later, Baiduri Bank handed over a Taurus Mobility Walker and 63 story books to the above mentioned Centre for use by children cancer patients. Baiduri Bank has worked closely with RIPAS Hospital throughout the years and has helped financially in many various areas.

Pierre Imhof, Baiduri Bank’s CEO, giving a helping hand to a patient in choosing a toy for the Paediatric Haemoto-Oncology Centre.

The patients with their toys after the shopping spree together with Baiduri Bank personnel.



Best Banking Group in Brunei 2011 Award from World Finance, UK

Baiduri Bank Group was again recognised as the Best Banking Group in 2011 by World Finance Magazine. This is the third year in a row that Baiduri Bank Group has won this prestigious award, demonstrating the Bank’s consistent performance and its commitment towards operational excellence.

Bank of the Year Award, Brunei 2011 from The Banker Magazine, UK

Baiduri Bank won yet another country award for the Bank of the Year from The Banker magazine for the 8th time since 2002. The award for a single bank in each country is for the best overall performance in the previous period incorporating performance criteria, qualitative achievements and strategic initiatives.

Ti Eng Hui, Baiduri Bank’s Deputy General Manager, Retail Banking and Branch Network (centre), proudly displaying the Bracken Award at The Banker Awards presentation event held at the Intercontinental Hotel, London on 30th November 2011. The Award was presented by Jane Cooper, Asia Editor and Transactional Banking editor of The Banker (left). On the right is Michael Buerk, former BBC journalist and host for the evening.

Baiduri Bank CEO, Pierre Imhof (right) and the Bank’s Deputy General Manager Retail Banking & Branch Network, Ti Eng Hui (middle) holding the crystal obelisk they received from Hywel Jones, Broadcast Editor of World Finance (left). The award presentation took place at Baiduri Bank’s Head Office in December 2011.

Company of the Decade 2001-2010 from World Finance, UK

In March 2011, Baiduri Bank was awarded the “Company of the Decade” for Brunei. Baiduri Bank was selected by World Finance through an independent world study taking into account important factors such as customer solutions, innovation, sustainability and track record with the ability to move with the ever changing pace of global business whilst providing care in the community. The ‘Company of the Decade’ awards represents the supreme accolade for companies that have performed exceptionally and proven themselves as dynamic forces in their industries over the past 10 years. The award reflects the continued success and financial achievements of both Baiduri Bank and its subsidiary, Baiduri Finance.

Pierre Imhof, Baiduri Bank’s CEO (right) receiving the “Company of the Decade 2001-2010” award from Nick Lawrence, World Finance’s Senior Production Editor at the London Stock Exchange in March 2011.

INTERNATIONAL AWARDS

In 2011, Baiduri Bank Group received three major awards, the highest number in any year in its seventeen year history.

Financial Statements 2011


Report of The Directors

The directors have pleasure in presenting their annual report and consolidated audited financial statements of Baiduri Bank Berhad (the Bank) and its subsidiaries (the Group) for the financial year ended December 31, 2011.

PRINCIPAL ACTIVITIES

The principal activities of the Bank and the Group are to carry on the business of banking and related financial services including dealing in investment securities, stock broking and e-financial services. There have been no significant changes in the nature of these activities during the financial year.

RESERVES AND PROVISIONS

There were no other material transfers to or from reserves and provisions during the financial year other than those disclosed in the financial statements.

FINANCIAL STATEMENTS

The state of affairs of the Bank as at December 31, 2011 is set out in the balance sheet. These financial statements were approved by the Board of Directors on March 14, 2012.

DIVIDENDS

B$

Dividends paid in respect of the financial year ended December 31, 2010 10,200,000

At the forthcoming Annual General Meeting, a total dividend of B$10,500,000 in respect of the current financial year ended December 31, 2011 will be proposed for shareholders’ approval.

Bank Group

B$’000 B$’000

Balance at December 31, 2010 13,152 23,379

Total profits for the financial year 30,242 17,520

Transferred from retained profits to:

- Statutory reserve (14,042) (14,042)

- Other reserve (4,859) (4,859)

Dividends paid (10,200) (10,200)

Balance at December 31, 2011 14,293 11,798

RESULTS


Report of The Directors

Directors

The Directors in office during the financial year and at the date of this report are:

YTM Pengiran Anak Isteri Pengiran Anak Hajah ZariahYAM Pengiran Muda Abdul Fattaah YM Dato Paduka Timothy Ong Teck Mong YM Dato Paduka Haji Mustappa Haji SiratHaji Abu Bakar bin IbrahimFrancis CazeBertie Cheng Shao Shiong

Auditors

The auditors, Deloitte & Touche, have indicated their willingness to accept re-appointment.

On behalf of the board

Brunei DarussalamDate: 14 March 2012

Director

Director

Director


We have audited the accompanying financial statements of Baiduri Bank Berhad (the Bank) and its subsidiary (the Group) which comprise the balance sheets of the Bank and the Group as at December 31, 2011, the profit and loss statements, statements of changes in equity and cash flow statements of the Bank and the Group for the year then ended, and a summary of significant and other explanatory notes.

DIRECTORS’ RESPONSIBILITY

The Bank’s directors are responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Brunei Darussalam Companies Act, Cap. 39 (the “Act”), the Brunei Darussalam Banking Order 2006 (the “Order”), and accounting principles generally accepted in Brunei Darussalam which are modified by the requirements that dealers’ commission of the subsidiary which were capitalized and previously amortised is written off completely and the practice of such amortising ceased with effect from January 1, 2011 in accordance with the directives of Autoriti Monetari Brunei Darussalam. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

AUDITOR’S RESPONSIBILITY

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OPINION

In our opinion,

a) the financial statements of the Bank and consolidated financial statements of the Group are properly drawn up in accordance with the provisions of the Act, the Order and accounting principles generally accepted in Brunei Darussalam which are modified by the requirements that dealers’ commission of the subsidiary which were capitalized and previously amortised is written off completely and the practice of such amortising ceased with effect from January 1, 2011 in accordance with the directives of Autoriti Monetari Brunei Darussalam, so as to give a true and fair view of the state of affairs of the Bank and the Group as at December 31, 2011 and of the results, changes in equity and cash flows of the Bank and the Group for the year ended on that date according to the best of our information and the explanations given to us, and as shown by the books of the bank and the Group; and

b) we have obtained all the information and explanations that we required.

DELOITTE & TOUCHECertified Public Accountants

NG HUI HUABrunei Darussalam Authorised Auditor

Brunei DarussalamDate: March 14, 2012

Independent Auditor’s Reportto the members of Baiduri Bank Berhad and subsidiaries


Profit & Loss StatementsYear ended December 31, 2011

Bank Group

2011B$’000

2010B$’000

Change 2011B$’000

2010B$’000

Change

Income

Interest income

Less: Interest expense

67,693

(12,346)

72,982

(12,619)

-7.2%

-2.2%

120,161

(18,894)

128,609

(22,225)

-6.6%

-15.0%

Net Interest Income

Fee income

Fee expense

55,347

9,693

(172)

60,363

8,493

(194)

-8.3%

14.1%

-11.3%

101,267

9,693

(172)

106,384

8,493

(194)

-4.8%

14.1%

-11.3%

Net fee income

Other operating income

9,521

27,522

8,299

31,215

14.7%

-11.8%

9,521

17,812

8,299

16,133

14.7%

10.4%

Total Operating Income 92,390 99,877 -7.5% 128,600 130,816 -1.7%

Less:

Personnel expenses

Provision for end of service benefits

Other overhead expenses

(20,633)

(859)

(23,767)

(20,372)

(500)

(23,515)

1.3%

71.8%

1.1%

(24,378)

(747)

(43,156)

(23,958)

(788)

(33,406)

1.8%

-5.2%

29.2%

Total operating expenses (45,259) (44,387) 2.0% (68,281) (58,152) 17.4%

Less:

Provision for loans losses

Loans/financing written off

Provision for diminution of investments

(11,200)

(11)

(105)

(15,849)

(222)

-

-29.3%

-95.0%

100.0%

(18,122)

(11)

(105)

(21,128)

(222)

-

-14.2%

-95.0%

-100.0%

Total impairment charges and provisions (11,316) (16,071) -29.6% (18,238) (21,350) -14.6%

Profit from operations

Less: Exceptional written off of dealers’ commission

35,815

-

39,419

-

-9.1%

0.0%

42,081

(18,988)

51,314

-

-18.0%

100.0%

Profit after exceptional written off

Less: Goodwill amortised

35,815

-

39,419

-

-9.1%

-

23,093

-

51,314

(75)

-55.0%

-100.0%

Profit before taxation

Less: Income tax expense

35,815

(5,573)

39,419

(5,341)

-9.1%

4.3%

23,093

(5,573)

51,239

(11,359)

-54.9%

-50.9%

Profit after taxation / Profit for the year 30,242 34,078 -11.3% 17,520 39,880 -56.1%

Attributable to:

Equity holders of the parent 30,242 34,078 -11.3% 17,520 39,880 -56.1%

Dividend per ordinary share (B$)

Basic earnings per share (B$)

Diluted earnings per share (B$)

Return on Assets, (ROA) – Before Tax, %

Return on Assets, (ROA) – After Tax, %

Return on Equity, (ROE) – After Tax, %

0.102

0.302

0.302

1.32

1.11

15.69

0.095

0.341

0.341

2.04

1.77

19.73

7.4%

-11.3%

-11.3%

-35.3%

-37.3%

-20.5%

0.102

0.175

0.175

0.67

0.51

8.40

0.095

0.399

0.399

1.92

1.50

19.80

7.4%

-56.1%

-56.1%

-65.1%

-66.0%

-57.6%


Balance SheetsDecember 31, 2011

Note Bank Group

2011B$’000

2010B$’000

Change 2011B$’000

2010B$’000

Change

ASSETS

Cash and short term funds

Balances with Ministry of Finance

Government Sukuk

Investments

Loans and advances

Investments in subsidiaries

Fixed assets

Other assets

1

1,569,502

130,213

26,974

180,562

752,068

25,249

17,860

18,130

755,902

96,731

23,973

158,083

820,636

25,249

20,881

29,164

107.6%

34.6%

12.5%

14.2%

-8.4%

0.0%

-14.5%

-37.8%

1,572,657

174,444

26,974

180,562

1,473,644

-

19,045

18,811

758,643

138,054

23,973

158,083

1,514,538

-

22,235

49,267

107.3%

26.4%

12.5%

14.2%

-2.7%

0.0%

-14.3%

-61.8%

Total assets 2,720,558 1,930,619 40.9% 3,466,137 2,664,793 30.1%

LIABILITIES AND EQUITY

Deposits from customers

Deposits from banks and other

financial institutions

Borrowings

Groups balances payable

Other liabilities

Deferred taxation

Provision for taxation

2 2,344,133

122,668

-

3,306

43,292

9,914

4,493

1,483,431

165,260

38,000

561

58,397

8,784

3,476

58.0%

-25.8%

-100.0%

489.3%

-25.9%

12.9%

29.3%

3,193,136

2,968

-

-

46,855

9,961

4,524

2,310,981

32,434

38,000

-

63,658

8,831

9,516

38.2%

-90.8%

-100.0%

0.0%

-26.4%

12.8%

-52.5%

Total liabilities 2,527,806 1,757,909 43.8% 3,257,444 2,463,420 32.2%

SHAREHOLDERS’ EQUITY

Share capital

Statutory reserve Fund

Other permanent reserves

100,000

73,600

19,152

100,000

59,558

13,152

0.0%

23.6%

45.6%

100,000

92,036

16,657

100,000

77,994

23,379

0.0%

18.0%

-28.8%

Total shareholders funds / Total equity 192,752 172,710 11.6% 208,693 201,373 3.6%

Total liabilities and equity 2,720,558 1,930,619 40.9% 3,466,137 2,664,793 30.1%

COMMITMENTS AND CONTINGENCIES 1,307,167 1,049,866 24.5% 1,307,167 1,049,866 24.5%


Statements of Changes In EquityYear ended December 31, 2011

BANK Sharecapital

B$’000

StatutoryreserveB$’000

GeneralreserveB$’000

Retainedprofits

B$’000Total

B$’000

Balance as at 31/12/2009

Net profit for 2010

Transfer during the year

Dividend for 2009

100,000

-

-

-

38,259

-

21,299

-

-

-

-

-

9,873

34,078

(21,299)

(9,500)

148,132

34,078

-

(9,500)

Balance as at 31/12/2010 100,000 59,558 - 13,152 172,710

Net profit for 2011


Dividend for 2010

-

-

-

-

14,042

-

-

4,859

-

30,242

(18,901)

(10,200)

30,242

-

(10,200)

Balance as at 31/12/2011 100,000 73,600 4,859 14,293 192,752

GROUP Sharecapital

B$’000

StatutoryreserveB$’000

GeneralreserveB$’000

Retainedprofits

B$’000Total

B$’000

Minority InterestB$’000

Totalequity

B$’000

Balance as at 31/12/2009

Written off

Net profit for 2010


Dividend for 2009

100,000

-

-

-

-

53,522

-

-

24,472

-

-

-

-

-

-

17,471

-

39,880

(24,472)

(9,500)

170,993

-

39,880

-

(9,500)

(214)

214

-

-

-

170,779

214

39,880

-

(9,500)

Balance as at 31/12/2010 100,000 77,994 - 23,379 201,373 - 201,373

Written off

Net profit for 2011


Dividend for 2010

-

-

-

-

-

-

14,042

-

-

-

4,859

-

-

17,520

(18,901)

(10,200)

-

17,520

-

(10,200)

-

-

-

-

-

17,520

-

(10,200)

Balance as at 31/12/2011 100,000 92,036 4,859 11,798 208,693 - 208,693


Cash Flow StatementsYear ended December 31, 2011

2011B$’000

2010B$’000

2011B$’000

2010B$’000

Cash flows from operating activities:

Interest income

Interest expenses

Operating fees and commission receipts

Recovered on loans previously provided/written off

Receipts on other operating activities

Cash payments to employees and suppliers

Payments on other operating activities

67,693

(12,346)

9,521

2,309

25,213

(20,194)

(18,031)

72,982

(12,619)

8,299

1,866

29,349

(20,126)

(16,273)

120,161

(18,894)

9,521

2,309

15,503

(23,973)

(56,528)

128,609

(22,225)

6,499

1,866

16,067

(23,135)

(25,174)

Cash flows from operating profit before changes

in operating assets and liabilities

(Increase)/decrease in operating assets

Funds advances to customers

Other operating assets

(Increase)/decrease in operating liabilities

Deposits and placements from customers,

banks and other financial institutions

Other operating liabilities

54,165

57,357

11,034

818,110

(52,793)

63,478

(12,727)

(9,913)

(22,037)

23,318

48,099

22,761

30,456

852,689

(56,426)

82,507

(62,329)

(21,367)

31,028

23,160

Net cash flows from operating activities before income tax

Income tax paid

887,873

(3,426)

42,119

(3,200)

897,579

(9,435)

52,999

(10,540)

Net cash inflow/(outflow) from operating activities 884,447 38,919 888,144 42,459

Cash flows from investing activities

Purchase of property, plant and equipment

Proceeds from sale of property, plant and equipment

Net (additions)/disposals of investments

(3,446)

1,866

(25,585)

(7,517)

1,881

(38,947)

(3,822)

1,867

(25,585)

(7,744)

1,936

(38,947)

Net cash inflow/(outflow) from investing activities (27,165) (44,583) (27,540) (44,755)

Cash flows from financing activities

Dividends paid

Minority interest written off

(10,200)

-

(9,500)

-

(10,200)

-

(9,500)

214

Net cash inflow/(outflow) from financing activities (10,200) (9,500) (10,200) (9,286)

Net increase/(decrease) in cash and cash equivalents 847,082 (15,164) 850,404 (11,582)

Cash and cash equivalents at beginning of the year 852,633 867,797 896,697 908,279

Cash and cash equivalents at end of the year 1,699,715 852,633 1,747,101 896,697

Bank Group


Other Financial InformationDecember 31, 2011

1 LOANS AND ADVANCES

1.1 Total loan and advances

2011B$’000

2010B$’000

2011B$’000

2010B$’000

Loans and advances

Overdrafts

Lease receivables

Interest receivables

632,003

257,556

-

14,317

690,423

262,439

-

12,950

1,354,845

257,556

70

14,317

1,385,272

262,439

187

12,950

Gross loan and advances 903,876 965,812 1,626,788 1,660,848

Less: Interest in suspense (89,170) (80,689) (89,333) (80,885)

Less: Loan loss provisions

- General

- Specific

814,706

-

(62,638)

885,123

(361)

(64,126)

1,537,455

-

(63,811)

1,579,963

(361)

(65,064)

Net loan and advances 752,068 820,636 1,473,644 1,514,538

1.2 Total loan and advances by sector

2011B$’000

2010B$’000

2011B$’000

2010B$’000

Agricultural

Financial

Manufacturing

Transportation

Infrastructure

Traders

Services

Constructions and property financing

Tourism

Telecommunication and information technology

Personal and consumption loans

10,436

949

30,464

32,875

51,475

129,583

92,367

208,937

7,062

21,541

227,236

6,918

936

20,712

81,214

54,533

129,080

78,036

204,454

11,858

30,370

265,397

10,436

949

30,464

755,787

51,475

129,583

92,367

208,937

7,062

21,541

227,236

6,918

936

20,712

776,250

54,533

129,080

78,036

204,454

11,858

30,370

265,397

Total 812,925 883,508 1,535,837 1,578,544

Bank

Bank

Group

Group



1.3 NON-PERFORMING LOANS

a. NPL Amount

2011B$’000

2010B$’000

2011B$’000

2010B$’000

Loans and advances

Overdrafts

Interest receivables

29,799

120,744

11,828

32,327

121,057

10,389

31,207

120,744

11,828

34,075

121,057

10,389

Gross amount 162,371 163,773 163,779 165,521

Less: Interest in suspense (89,170) (80,689) (89,333) (80,885)

Less: Loan loss provisions

- General

- Specific

73,201

-

(62,638)

83,084

(361)

(64,126)

74,446

-

(63,811)

84,636

(361)

(65,064)

Net amount 10,563 18,597 10,635 19,211

2 DEPOSITS FROM CUSTOMERS

2.1 By type of deposit

2011B$’000

2010B$’000

2011B$’000

2010B$’000

Demand deposits

Savings deposits

Fixed deposits

328,254

296,761

1,719,118

295,641

213,541

974,249

328,254

1,035,520

1,829,362

295,641

926,896

1,088,444

Total 2,344,133 1,483,431 3,193,136 2,310,981

b. NPL Ratios

2011%

2010%

2011%

2010%

Gross non-performing ratio

Net non-performing ratio

8.98

1.17

9.39

1.93

4.84

0.65

5.36

1.16

Bank

Bank

Bank

Group

Group

Group



3 DIVIDENDS

2011B$’000

2010B$’000

2011B$’000

2010B$’000

On ordinary shares

Net dividend paid to ordinary shareholders 10,200 9,500 10,200 9,500

Gross ordinary dividend 10,200 9,500 10,200 9,500

Total dividend 10,200 9,500 10,200 9,500

Gross persharecent

Dividendnet of tax

B$’000

Gross persharecent

Dividendnet of tax

B$’000

Authorised:

Final dividend paid 10.2 10,200 9.5 9,500

4 RELATED PARTY TRANSACTIONS

Related parties in these financial statements refer to members of the holding company’s group of companies. Some of the Bank’s transactions and arrangements are with related parties and subsidiary companies and the effect of these on the basis determined between the parties are reflected in these financial statements.

(i) Transactions with Directors, Close relatives of a director and other related entities:

Bank

2011

Directors

2010

Group

a. Balance Sheet

2011B$’000

2010B$’000

Credit cards 26 111

Total 26 111

Liabilities

Deposits 143 67

Total 143 67

Off-balance sheet items

Letter of credit

Guarantees

Undrawn facilities

Other commitments and contingencies

-

-

149

-

-

-

-

-

Total 149 -

No of share held

Dividends paid

-

-

-

-



b. Income statement

2011B$’000

2010B$’000

Income

Interest income

Other income

-

-

-

-

-

-

Total - -

Expenses

Interest expenses

Fees

Other expenses

-

-

-

-

-

-

-

-

Total - -

Compensation paid to Directors: 2011B$’000

2010B$’000

Short-term employee benefits

Long-service leave

Post-employment benefits

-

-

-

-

-

-

Total - -

Directors



(ii) The key management personnel (KMP) and other individuals and entities (other individuals and entities shall include individuals and entities referred in section (b) to (f) of section 30 (1) of the Banking Order 2006)

a. Balance Sheet

Assets

Loans and advances (exc. Credit cards)

Credit cards

Other assets

2011B$’000

3,687

305

-

2010B$’000

2,899

394

-

2011B$’000

2,454

140

-

2010B$’000

2,552

516

-

Total 3,992 3,293 2,594 3,068

Liabilities

Deposits

Borrowings

Other liabilities

2,677

-

-

2,677

-

-

463

-

-

336

-

-

Total 2,677 2,677 463 336


Letter of credit

Guarantees

Undrawn facilities


-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Total - - - -

No of shares held

Dividends paid

-

-

-

-

-

-

-

-

b. Income statement

Income

Interest income

Other income

2011B$’000

153

-

2010B$’000

96

-

2011B$’000

105

-

2010B$’000

116

-

Total 153 96 105 116

Expenses

Interest expenses

Fees

Other expenses

52

-

-

37

-

-

8

-

-

17

-

-

Total 52 37 8 17

Other Individualsand entities

Other Individualsand entities

KMP

KMP



(iii) The group related party, shall include subsidiaries, associates and other related companies

In respect of the unsecured loan and advances granted to related parties, the Bank has sought the approval from the Authority in terms of the Banking Order 2006.

a. Balance Sheet

2011B$’000

2010B$’000

2011B$’000

2010B$’000

2011B$’000

2010B$’000

Assets

Loans and advances

Other assets

-

41

-

22

-

-

-

-

50,665

8

108,753

9

Total 41 22 - - 50,673 108,762

Liabilities

Deposits

Borrowings

Other liabilities

119,700

-

3,347

132,826

-

583

-

-

-

-

-

-

46,560

-

-

57,676

-

-

Total 123,047 133,409 - - 46,560 57,676


Letter of credit

Guarantees

Undrawn facilities


-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

242

17,314

17,132

125

8,837

12,776

16,517

225

Total - - - - 34,813 38,355

% of shares held 100 100

Dividends paid 10,475 15,263

b. Income Statement

2011B$’000

2010B$’000

2011B$’000

2010B$’000

2011B$’000

2010B$’000

Income

Interest income

Other income

-

-

-

-

-

-

-

-

2,906

-

5,083

-

Total - - - - 2,906 5,083

Expenses

Interest expenses

Fees

Other

959

-

-

17

-

-

-

-

-

-

-

-

-

309

-

-

437

-

Total 959 17 - - 309 437

Subsidiaries

Subsidiaries

Associates

Associates

Other relatedCompanies

Other relatedCompanies



2011B$’000

2010B$’000

2011B$’000

2010B$’000

Capital

Core capital (Tier I Capital)

Supplementary capital (Tier II Capital)

Less: Investment in subsidiaries

192,752

-

(25,249)

172,710

361

(25,249)

208,693

-

-

201,575

361

-

Total capital base 167,503 147,822 208,693 201,936

Total risk-weighted amount

Risk-weighted amount for credit risk

Risk-weighted amount for operational risk

1,103,298

143,671

846,922

141,899

1,826,966

194,097

1,562,327

206,633

Total risk-weighted amount 1,246,969 988,821 2,021,063 1,768,960

Capital ratios

Core capital (Tier I) Ratio,%

Total Capital Ratio,%

15.46

13.43

17.47

14.96

10.33

10.33

11.40

11.42

6 SIGNIFICANT RISKS ASSOCIATED WITH THE BANK’S OPERATIONS

Accepting and managing risk is central to the business of the Group and is an important source of competitive advantage.

The Board of Directors is accountable for establishing and maintaining an environment that manages risk in an effective and efficient manner. This includes a robust system of limits, controls and reporting processes. Management and senior executives track key performance indicators, investigates and reports on effectiveness of risk management systems to the Board of Directors. The Group’s internal audit department also provides an independent assessment of this process.

The following discussion on risk management concentrates on the Group’s main areas of risk:

(i) Credit risk

Credit risk is the risk of financial loss that results from customers failing to meet their obligations. Credit risk arises primarily from lending-related activities and represents Group’s major risk type.

The Board of Directors approves major prudential policies and limits that govern large customer exposures and industry concentration. The Board of Directors also appoints independent credit officers in each business areas. These credit officers would work with the line managers to ensure that approved policies are applied appropriately and achieve optimal returns on the Group’s risk exposure.

In respect of its lending-related activities, management regularly review the amount of risk accepted in related to one borrower or groups of borrowers, industry segments, level of non-performing loans and adequacy of provisioning requirements.

Exposure to credit risk is also managed in part by obtaining collateral. Some of the assets typically included as collateral are property, assignment of rental income, salary and deposit placement.

5 CAPITAL ADEQUACY The capital adequacy ratios are as follows:

Bank Group



(ii) Liquidity risk

Liquidity risk is the risk that the Group is unable to meet its cashflow obligations as and when they fall due. To manage the risk, the Group monitors and maintains sufficient liquid assets to ensure that the liquidity risk exposure is managed and minimised. Additionally, the Group has to comply with the regulations and guidelines of Ministry of Finance in maintaining minimum cash balances with the Ministry of Finance.

(iii) Interest/Financing rate risk

Interest/financing rate risk is the risk of earnings and value of financial instruments caused by fluctuations in interest/financing rates.

Sensitivity to interest/financing rates arises from the differences in the maturities and re-pricing dates of assets and liabilities. These differences are monitored and managed by management to ensure that the risk exposure is minimised. These include actively reviewing its interest/financing rate to ensure that the Group receives an optimal and yet competitive interest/financing spread.

Baiduri Securities Sdn Bhd ceased operation after January 31, 2002 and had filed for de-registration in December 2010. Full provision has been made for the cost of this investment.

Current Year Previous Year

By Bank

Name of Company Principal ActivityCost

B$’000

Marketvalue

B$000%

HolidingCost

B$’000

Marketvalue

B$000%

Holiding

Baiduri Finance Berhad Finance Company 25,249 - 100 25,249 - 100

Baiduri Securities Sdn Bhd Share brokers and dealers

in securities and

investments of all kinds

- - 51 - - 51

7 INVESTMENTS IN SUBSIDIARIES



CertificationWe, the undersigned, being the Senior Manager-Finance and Chief Executive Officer of Baiduri Bank Berhad certify jointly that:-

(a) the above accounts and statements have been prepared in accordance with the format and definitions prescribed by the Authority in terms of sections 28 (4) and (5) of the Banking Order 2006.

(b) the information contained in these statements have been extracted from the audited financial account and statements.

Veronica ChongSenior Manager, Finance14 March 2012

Pierre ImhofChief Executive Officer14 March 2012



BAIDURI BANK GROUP

Bandar Seri Begawan P.O. Box 2220, BSB BS 8674Negara Brunei Darussalam

Kuala BelaitP.O. Box 1368, Kuala Belait KA1131Negara Brunei Darussalam

SeriaP.O. Box 25, Seria KB1190Negara Brunei Darussalam

Website Addresswww.baiduri.com

Email [email protected]

BAIDURI BANK BERHADList of Offices

Head OfficeBlock A, Units 1-4, Kiarong ComplexLebuhraya Sultan Hassanal Bolkiah BE1318Tel No: (673) 226 8300Fax No: (673) 245 5599Email: [email protected]

Corporate Banking DivisionBlock A, Units 1-4, 2nd Floor, Kiarong Complex, Lebuhraya Sultan Haji Hassanal Bolkiah BE1318Tel No: (673) 226 8108Fax No: (673) 245 5558

Retail Banking DivisionBlock A, Units 1-4, 1st Floor, Kiarong Complex, Lebuhraya Sultan Haji Hassanal Bolkiah BE1318Tel No: (673) 226 8321Fax No: (673) 245 5572

Operations Management DivisionBlock B, Units 1-3, 1st Floor, Kiarong Complex, Lebuhraya Sultan Hassanal Bolkiah BE1318Tel No: (673) 226 8381Fax No: (673) 245 5656

Card CentreBlock A, Unit 8, Kiarong Complex, Kiarong Complex, Lebuhraya Sultan Hassanal Bolkiah BE1318Tel No: (673) 226 8300Fax No: (673) 245 4184Customer Helpdesk: (673) 245 4187

Loan CentreBlock A, Unit 6, Kiarong Complex, Lebuhraya Sultan Hassanal Bolkiah BE1318Tel No: (673) 226 8381Fax No: (673) 245 5656

Wealth Management CentreUnit 10, Level 2, Seri Kuilap Complex Kg Kuilap, Bandar Seri BegawanTel No: (673) 223 2154/56Fax No: (673) 223 2155

E-Banking CentreBlock B, Unit 4, 1st Floor, Kiarong ComplexLebuhraya Sultan Hassanal Bolkiah BE1318Customer Helpdesk: (673) 242 5644Fax No: (673) 242 5741Email: [email protected]

Call CentreBlock A, Unit 8, Kiarong Complex, Lebuhraya Sultan Hassanal Bolkiah BE1318Tel No: (673) 244 9666, 245 4187

Business Services CentreBlock B, Units 1-5, Kiarong ComplexLebuhraya Sultan Hassanal Bolkiah BE1318Tel No: (673) 226 8300 Fax No: (673) 245 5599

PRESTIGE CENTRES

KiarongGround Floor, Block A, Units 1-4,Kiarong Complex,Lebuhraya Sultan Hassanal Bolkiah BE1318Tel No: (673) 226 8300Fax No: (673) 245 2888

KiulapUnit 10, 1st Floor, Seri Kuilap ComplexBandar Seri Begawan BE1518Tel No: (673) 223 6905 ext. 18Fax No: (673) 223 6904

BeribiUnit 1, Ground Floor, Sumbangsih Bahagia, Kompleks Perindustrian BeribiBandar Seri Begawan BE1118Tel No: (673) 242 6800Fax No: (673) 245 0877

SeriaUnit 10, 1st Floor, Jalan Omar Ali Seria KB 2733Tel No: (673) 322 2450 ext. 213/215Fax No: (673) 322 1070

BRANCH NETWORK

Beribi BranchUnit 1, Ground Floor, Sumbangsih Bahagia, Kompleks Perindustrian BeribiBandar Seri Begawan BE1118Tel No: (673) 242 6827Fax No: (673) 242 6829

Kiarong BranchGround Floor, Block A, Units 1-4,Kiarong Complex,Lebuhraya Sultan Hassanal Bolkiah BE1318Tel No: (673) 226 8300Fax No: (673) 245 2888

KiulapUnit 10, Ground & 1st Floor, Seri Kuilap ComplexBandar Seri Begawan BE1518Tel No: (673) 223 6905 / 6 / 10Fax No: (673) 223 6904

Kuala Belait BranchUnits 2 & 3, Tang Ching Ying BldgJalan Sungai, Kuala Belait KA2231Tel No: (673) 333 0650Fax No: (673) 334 2297



Muara Town BranchGround Floor, Bangunan Tiga TingkatPekan Muara BT1128Tel No: (673) 277 1700 / 1Fax No: (673) 277 1702

Sengkurong BranchUnits 1 & 2, Ground Floor, SengkurongComplex,Kg Sengkurong A BG1121Tel No: (673) 266 3960Fax No: (673) 266 3959

Seria BranchUnit 10, Jalan Sultan Omar Ali, SeriaTel No: (673) 322 2450 / 438 / 960 / 963Fax No: (673) 322 2433

Serusop BranchUnit 1, Block A, Komplex Delima JayaSimpang 62, Jalan MuaraKg Delima Satu BB4713Tel No: (673) 234 3288Fax No: (673) 234 3285

Supasave Gadong BranchUnits 6-8, SupaSave GadongKg Mata-Mata BE1718Tel No: (673) 242 0627 / 29Fax No: (673) 242 0909

The Mall BranchUnit G-30, Ground Floor, The MallAbdul Razak Complex, Gadong BE3519Tel No: (673) 242 1498, 242 1398 / 96Fax No: (673) 242 1415

Tutong BranchUnit 1, Ground & 1st Floor, Tutong Central MallKg Petani, Pekan Tutong TA1141Tel No: (673) 426 0707Fax No: (673) 426 0714

Yayasan BranchG.25, Ground Floor, Block CYayasan Sultan Haji Hassanal Bolkiah Complex BS8711Tel No: (673) 223 3233Fax No: (673) 222 1891

BAIDURI BANK OFF-SITEATM LOCATIONS

Brunei International AirportBunut Post OfficeCentrepoint, GadongGiant Hypermarket, Tasik RImbaGrand City Hotel, Batu BersuratHua Ho Manggis MallHua Ho Mall, Tanjong BunutMail Processing Centre,Old Airport BerakasRIPAS HospitalSeri Q-lap Mall, Kuilap Soon Lee Megamart, Kuala BelaitSoon Lee Lambak KananSoon Lee Sungai LiangSupaSave, MabohaiSupaSave, PanagaPetani Mall, TutongTimes Square Mall, Berakas

BAIDURI FINANCE(a wholly-owned subsidiary ofBaiduri Bank)

Head OfficeSumbangsih Bahagia, Units 1-3Ground and 1st FloorKomplex Perindustrian BeribiHighway End, Gadong BE1118Tel No: (673) 242 6800Fax No: (673) 245 0877

Kuala BelaitUnit G20, Ground FloorKompleks HarapanJalan Setia Diraya, Kuala Belait KA3131Tel No: (673) 333 0570Fax No: (333 0572

Email: [email protected] or [email protected]

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